Even as developed markets stalled and spluttered in August, emerging markets just kept on rising. Brazil’s Bovespa is up 30% since January, while the Shanghai market has almost doubled. Closer to home, the CAC 40 and FTSE 100 have struggled to return even 4%. One reason, says Gartmore’s Chris Palmer, is that investors have begun to think of emerging markets as less risky than their developed market brethren. Some are even thinking of them as a safe haven. After all, “who is bailing out the investment banks and who has the current account surplus?” he asks Citywire. “It is the emerging markets.”
Except for a brief move between 2004 and 2006, the NYU graduate has watched this change in attitudes develop since 1995, when he took over control of the Gartmore Emerging Markets Opportunities Fund, which has returned 65% in the past year. Looking for companies “with high levels of cash flow and relatively low levels of corporate debt”, he tells the FT that he takes a bottom-up approach to picking stocks, concentrating on themes such as the rise of the new middle class. This explains the high concentration of mobile phones and consumer electronic companies in his 87-stock portfolio. It’s a strategy that’s paid off so far. Since he took over the fund again in 2006, it “consistently outperforms the sector average”, Donna Bradshaw of IFG tells The Daily Telegraph, using “a combination of good stock picking and geographic moves”. IFG expects the fund to “continue to outperform the sector over the longer term”.
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Gartmore Emerging Markets top ten holdings
Name of holding % of assets
Petroleo Brasileiro SA Petrobras, 2.70%
China Mobile Ltd, 2.50%
Gazprom OAO, 2.40%
America Movil SAB DE CV, 2.40%
Hon Hai Precision Industry, 2.40%
Companhia Vale Do Rio Doce, 2.40%
Samsung Electronics Co, 2.40%
Lojas Renner SA, 2.30%
Pacific Basin Shipping Ltd, 2.10%
Bharti Airtel, 2.00%